question

innovation

answer

refers to the process by which ideas get transformed into new offerings, including products, services, processes, and branding concepts that will help firms grow

question

Why do firms create new products? (5)

answer

changing customer needs market saturation (no new demand,,,w/o new products, value of firm declines. ex- car company, ppl want new cars) manage risk through diversity (protect against external shock) fashion cycles improving business relationships

question

diffusion of innovation

answer

process by which the use of an innovation spreads throughout a market group, over time and across categories of adopters

question

pioneers or breakthroughs

answer

new products (establish a completely new market or radically change rules of comp and consumer prefs) that can add tremendous value to firms, establish a completely new market

question

first movers

answer

first to create the market or product category easily recognized establishes commanding and early market share lead

question

innovators

answer

buyers who want to be the first on the block to have the new product or service, 2.5%

question

Early adopters

answer

generally don't take as much risk as innovators do but wait and purchase the product after a careful review, 13.5%

question

Early majority

answer

*few new products can be profitable until this large group buys them, don't like to take much risk and tend to wait until the bugs are worked out, 34%

question

Late majority

answer

last group of buyers to enter the new product market, product has achieved full market potential already 34%

question

Laggards

answer

consumers like to avoid change and rely on traditional products until they are no longer available, 16%

question

5 different types of innovation and percentages

answer

Innovators 2.5% Early adopters 13.5% Early majority 34% Late majority 34% Laggards 16%

question

4 factors enhancing the diffusion of a good or service

answer

Relative advantage (better) compatibility observability complexity and trial-ability (apple- stores to try out) ACOC

question

Product development process (6 steps)

answer

Idea generation -> Concept Testing -> Product Development -> Market Testing -> Product Launch -> Evaluation of Results

question

R&D R&D consortia

answer

research and development R&D by a group who shares info to whole community

question

Licensing

answer

firms buy rights to use technology or ideas from other firms through a licensing agreement

question

Brainstorming

answer

groups work together to generate ideas, no idea can be immediately accepted or rejected

question

Outsourcing

answer

enlisting help of outside firms like IDEO, helps clients generate new product and services ideas in certain industries

question

competitors' products: Reverse engineering

answer

Taking apart a product, analyzing it, and creating an improved product that does not infringe on the competitor's patents

question

how firms develop new products (6)

answer

internal R&D, R&D consortia, licensing, brainstorming, outsourcing, competitors' products, consumer input

question

consumer input

answer

focus groups, interviews, surveys, looking at consumer behavior, social media

question

Lead users

answer

innovative product users who modify existing products according to their own ideas to suit their specific needs

question

Concepts

answer

brief written descriptions of the product, its technology, working principles, other forms, and what customer needs it would satisfy

question

Concept testing

answer

process in which a concept statement is presented to potential buyers or users to obtain their reactions

question

Product development or design

answer

process of balancing various engineering, manufacturing, marketing, and economic considerations to develop a product's form and features or a service's features

question

Prototype

answer

first physical form or service description of a new product

question

Alpha testing

answer

firm attempts to determine whether the product will perform according to its design and whether it satisfies the need for which it was intended (inside R&D Department)

question

Beta testing

answer

uses potential customers, examine the product prototype in a real use setting to determine its functionality, performance, and potential problems (real world test)

question

Premarket tests

answer

conducted by firms to determine how many customers will try and then continue to use the product or service according to a small group of potential consumers

question

Test marketing

answer

introduces the offering to a limited geographical area prior to a national launch, strong predictor for product success because they can study actual purchase behavior

question

product launch

answer

4 ps and timing

question

Trade promotions

answer

Promotions to wholesalers or retailers to get them to purchase the new products, often combine introductory price promotions, special events

question

Introductory price promotions

answer

limited-duration, lower-than-normal prices designed to provide retailers with an incentive to try the products

question

Trade show

answer

temporary concentration of manufacturers that provide retailers the opportunity to view what is available and new in the marketplace

question

manufacturer's suggested retail price

answer

encouraged price for retailers to sell at

question

slotting allowance

answer

fee paid simply to get new products into stores or gain more and better shelf space for their products

question

3 factors of evaluation of results

answer

1) satisfaction with performance 2) customer acceptance 3) satisfaction with firm's sales and profits

question

Product life cycle

answer

defines the stages that products move through as they enter, get established in, and ultimately leave the marketplace

question

Introduction stage

answer

product category first launches (innovators start buying product)

question

Growth stage

answer

product gains acceptance, demand and sales increase, more competitors emerge

question

Maturity stage

answer

Industry sales reach their peak, firms try to rejuvenate their products by adding new features or repositioning them

question

Decline

answer

when the product eventually exits the market

question

shape of product life cycle curve

answer

bell shaped

question

The diffusion of innovation theory is useful to marketers in helping them

answer

predict which types of customers will buy their product immediately and later

question

The __________ diffusion of innovation group is crucial because few new products can be profitable until this large group buys them.

answer

The early majority is the first large group to adopt the product. Without this group, profits are unlikely to materialize. early majority

question

When testing new products, most firms consider the question of whether testing products on animals

answer

Some firms do not believe in conducting any animal testing at all, and a few consider animal testing appropriate in any situation. Many firms, though, find a middle ground, considering the benefit to humans of the research. The correct answer is: should be done when the new product does not contribute to the health and well-being of human users.

question

Computer game companies constantly monitor computer game-related blogs keeping track of the latest hot products, because they know that their customers crave the latest and greatest games. They use this information to create new products that primarily provide the benefit of

answer

Since customers crave the latest and greatest, this indicates that most sales come from new products, requiring game manufacturers to keep up with that trend. The correct answer is: keeping up in a market where sales come mostly from new products.

question

How is consumer panel data collected during the test marketing phase of a new product introduction?

answer

The consumer panel data is collected by panelists scanning in their receipts using a home scanning device. The correct answer is: Panelists scan their receipts on a home scanning device.

question

For new product marketers, early adopters are important because they tend to be

answer

Early adopters, who are not the very first buyers of a new product (those are the innovators) but who still buy very early in the product's life, are important to the diffusion of the products because they are often opinion leaders. The correct answer is: opinion leaders.

question

If the __________ diffusion of innovation group is relatively small, the number of people who ultimately adopt the innovation likely will also be small.

answer

Early adopters, who are not the very first buyers of a new product (those are the innovators) but who still buy very early in the product's life, are important to the diffusion of the products because they are often opinion leaders. If there are relatively few early adopters to serve as opinion leaders, the market for the product is likely to be small. The correct answer is: early adopter

Marketing Chapter 12: Developing New Products – Flashcards

Unlock all answers in this set

Haven't found what you were looking for?

Search for samples, answers to your questions and flashcards